Avoid flat fee agents, industry body warns

The Real Estate Institute of New South Wales (REINSW) has warned sellers on going to agents who ask for upfront fees, as it poses a real risk of not getting the best price for your property.

REINSW president Leanne Pilkington said the current weaker market highlights the impact upfront fees have on sellers.

“There had been a lot of press surrounding companies that offer a flat fee upfront to sell a consumer’s home rather than the traditional commission model,” she said.

“There is no motivation or incentive for these agents to take a professional approach in achieving the best possible result as they have already been paid regardless of the outcome.”

While in stronger markets upfront fees can save sellers money, the concept itself is hard to properly assess due to bursts of high demand and low supply; there is no way to see how this payment method functions consistently over the long-term.

“As the peak body REINSW is therefore concerned for sellers in this changing market who are vulnerable to such low-cost, high-risk strategies that have the potential to leave them in the lurch,” Ms Pilkington said.

“We encourage consumers to explore a full range of options when it comes to selling their most valuable asset: don’t just go for the lowest cost option as the risks are too high if you get it wrong. Never take anything on face value, do your research and ensure that you are making the best decision.

“As the market cools the true value of an experienced real estate professional can really be seen.”